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Just 46,500 people took out a loan for house purchase in March, according to the figures from the Council of Mortgage Lenders.

Other renters can get a mortgage but have decided that it is too risky to buy at the current time, and decide to keep on renting.

With property prices falling - and predicted to keep on falling - many believe it could be a disastrous move to buy at the current time.

Many are waiting and hoping that prices will drop even further before making their move onto the property ladder, or up the ladder into a bigger home.

John Heron, managing director of Paragon, said: "The recent lack of mortgage availability for potential first-time buyers as well as a fall in confidence in the housing market has caused more people to stay in private homes for longer."

The report highlights a dramatic side effect of the mortgage crisis.

Rather than dreaming of owning a family home with a garden, couples with young families are choosing to rent, he said.

He said families used to see rented accommodation as a "stop gap", but it is now seen as a "suitable long-term family home."

The number of people who are renting, not buying, has soared to its highest level since the 1970s, according to Government figures.

There are now 2.6 million households renting in England, compared to 1.9 million before house prices started rising in 1996.

The mortgage crisis means that this number is likely to keep on rising, also fuelled by rising student numbers and immigrants.

A separate report, from The County Homesearch Company, which finds homes for people to rent or buy, said it has spotted a rental rush.

There is such demand for the right homes that people are "gazumping" rival renters with higher offers to secure the home of their dreams.

Katy Waite, a local director of the firm in Surrey, said she has been "inundated" with requests from prospective tenants.

She said: "Many of our clients are facing the prospect of being guzumped after bidding for properties to rent.

"Landlords have people queuing up to rent their properties, ready to pay full deposits on the spot, and the full rental price without question.

"If a client does not move quickly they face losing out."

It is reminiscent of the housing boom last summer when homes would sell for far more than the asking price, and would be sold by "sealed bid".

Managing director Jonathan Haward said landlords are able to "cherry pick" the best tentants, such as professional couples with no children.

The mortgage crisis continued yesterday with Citigroup becoming the latest American bank to stop offering new mortgages.

Its division, Future Mortgages, a small specialist lender, is closing to new business from Wednesday, following a lead set by many of its rivals.

It comes as First Direct, owned by HSBC, bucked the trend yesterday and said it will resume lending mortgages to new customers.

Seven weeks ago, it became the first bank to close its doors to new customers, saying it would only lend mortgages to its 1.1 million existing customers.

First Direct blamed the "unprecedented" number of applications for its cheap two-year fixed rate deal which lead to serious customer service problems.

But the bank's mortgages are much more expensive than they used to be.

The two-year fixed rate deal has shot up from 4.95 per cent to 5.76 per cent, and comes with a £1,499 arrangement fee.

To get this deal, it is only possible to borrow up to 80 per cent of the property's value.